Adscend Settles With Washington A.G. For $100,000

Washington Attorney General Rob McKenna has extracted $100,000 from affiliate marketing company Adscend for allegedly violating federal spam laws by working with affiliates who
sent misleading messages to Facebook users.

The settlement also calls for Adscend to closely monitor affiliates, and in some cases to immediately suspend those who spam Web users. U.S.
District Court Judge Marsha Pechman in Seattle signed the consent decree earlier this week. A separate lawsuit brought by Facebook was resolved last month with a confidential settlement.

Adscend didn't admit wrongdoing as part of the settlement.

The case against Adscend stems from allegations that affiliates lured Facebook users into filling out marketing surveys by
promising them the chance to view "salacious content" -- like a clip with the caption: "[Video] OMG! See What Happens to his Ex Girlfriend."

The company's affiliates allegedly sent ads
promoting those clips to Facebook users, but made it seem as if the messages came from users' friends. People who tried to view the content were intercepted by a widget requesting age verification
information, according to the Washington Attorney General. People who clicked on the widgets ultimately landed on survey pages that asked for names, email and other personal information. In some
cases, users who clicked on the widgets also spread the original ad to their friends.

Adscend allegedly garnered almost $1 million a month from surveys filled out by Facebook users. Adscend
said in a statement that it felt "vindicated" by the settlement because the $100,000 it agreed to pay is far less than the amount the Washington Attorney General said the company had earned from the
alleged spam campaign. "Our contention from the outset was that this case had no merit, and we believe the outcome validates our position,” Adscend attorney Mark Rosenberg said in a
statement.

The Washington Attorney General contended that Adscend violated the federal CAN-SPAM law on the theory that its affiliates mislead Facebook users about the origin of the messages,
as well as their content.

CAN-SPAM prohibits marketers from misleading email recipients about the identity of messages' senders or subject matter. But it's not clear whether the judge
presiding over this matter will decide that the 2003 law applies to messages posted on Facebook.

Adscend agreed as part of the settlement that CAN-SPAM applies to messages sent via social
networking sites as well as ads sent to email inboxes. But the agreement says that Adscend can later reject that interpretation if the law, if the U.S. Supreme Court, or the 9th Circuit Court of
Appeals, rules that CAN-SPAM doesn't apply to posts on social networking pages.